The Board of Directors of Shenandoah Telecommunications Company (Shentel) (Nasdaq: SHEN) declared a cash dividend of $0.36 per share. The dividend is an increase of $0.03 per share or 9% over the 2012 dividend. The dividend will be payable...

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Shenandoah Telecomm (SHEN), based in Edinburg, VA, is a telecommunications hybrid - a holding company with subsidiaries in wireless, land-lines, cable and more.

ShenTel has the following five reporting segments, which it operates and manages as strategic business units organized geographically and by lines of business: [1]

wireless personal communications services, or PCS, as a Sprint PCS Affiliate of Sprint Nextel, in portions of Virginia, West Virginia, Maryland and Pennsylvania, through Shenandoah Personal Communications Company;

telephone, which involves the provision of regulated and non-regulated telephone services in the Commonwealth of Virginia, through Shenandoah Telephone Company;

mobile, which involves the provision of tower leasing and paging services, through Shenandoah Mobile Company;

cable TV, which involves the provision of cable television services in Virginia and West Virginia, through Shenandoah Cable Television Company; and

other, which involves the provision of Internet, network facility leasing, long-distance and CLEC services, through ShenTel Service Company, Shenandoah Network Company, Shenandoah Long Distance Company, ShenTel Communications Company and Converged Services of West Virginia, and the provision of investments and management services to its subsidiaries, through Shenandoah Telecommunications Company.

A Highly Regulated Environment

The telecommunications industry is a heavily regulated market. In the U.S., communications services are subject to regulation at the federal level by the FCC and in certain states by public utilities commissions, or PUCs. With regards to wireless, the FCC regulates the licensing, construction, operation, acquisition and sale of all wireless operations and wireless spectrum holdings. With regards to wireline, The Telecommunications Act of 1996 was designed to promote competition and eliminate legal and regulatory barriers for entry into local and long distance communications markets. It also required companies to allow resale of specified local services at wholesale rates, negotiate interconnection agreements, provide nondiscriminatory access to unbundled network elements, and allow co-location of interconnection equipment by competitors. It speaks for itself that in such a heavily regulated market, any significant regulatory change could have a major impact on the company or industry as a whole.

Shenandoah Telephone Company

Limited Competition

Shenandoah Telephone Company is one of a number of rural telecom carriers that operate primarily in markets exempt from direct wireline competition by federal law. While these rural local exchange carriers (RLECs) still face modest competition, generally coming from wireless carriers offering large buckets of minutes, customer retention has been stronger, and their total access-line counts have held up better than those of their Baby Bell brethren.

Line Substitution

RLECs have come under pressure as consumers swap traditional phone lines for wireless substitutes. Analysts have questioned whether these increased access line losses will affect the sustainability of revenue and free cash flow for RLECs. Additionally, extra competition has come in the form of cable companies that offer triple-play packages including voice services.